As free goods become increasingly plentiful throughout the economy, and people learn to recycle, swap and exchange goods without monetary transaction, it becomes very difficult to engineer an inflation problem.

“In the midst of a national economic recovery led by Silicon Valley’s resurgence, as measured by corporate profits and record stock prices, something strange is going on in the Valley itself. Most people are getting poorer,” said Cindy Chavez, executive director of San Jose-based Working Partnerships USA, a nonprofit advocating for affordable housing, higher minimum wages and access to health care.

The risk is that the island will slide into a Greek-style mess as a result, labouring under a high debt burden and conditions imposed by creditor countries. The European Commission recently forecast that GDP, which declined last year by 2.3%, will fall by 3.5% in 2013 and by 1.3% in 2014. Even this may be too optimistic because the Cypriot economy is not laden down just by its jumbo banks. The burden of private non-financial debt (ie, of households and non-financial firms) is the third-highest in the euro area